ACQUISITIONS AND DISPOSITIONS

The Company’s growth strategy includes expansion through strategic and synergistic acquisitions. The goodwill resulting from these acquisitions arises largely from synergies expected from combining the operations of the businesses acquired with our existing operations, as well as from benefits derived from gaining the related assembled workforce.

2017 Acquisitions

During the year ended December 31, 2017, the Company acquired ten centers in the Netherlands, three centers in the United States, and one center in the United Kingdom in seven separate business acquisitions, which were each accounted for as business combinations. The centers were acquired for cash consideration of $21.5 million, net of cash acquired of $0.3 million, and consideration payable of $0.2 million. The Company recorded goodwill of $14.3 million related to the full service center-based child care segment, a portion of which will be deductible for tax purposes. In addition, the Company recorded intangible assets of $2.3 million, consisting of customer relationships that will be amortized over three to five years, as well as fixed assets of $7.3 million, deferred tax liabilities of $0.6 million, and a working capital deficit of $1.3 million in relation to these acquisitions.

The allocation of purchase price consideration is based on preliminary estimates of fair value; such estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). As of December 31, 2017, the purchase price allocations for these acquisitions remain open as the Company gathers additional information regarding the assets acquired and the liabilities assumed. The operating results for the acquired businesses are included in the consolidated results of operations from the date of acquisition, which were not material to the Company’s financial results.

2017 Dispositions

During the year ended December 31, 2017, the Company disposed of its remaining three centers in Ireland for a loss of $3.7 million, which was included in other expenses in the consolidated statement of income, offset by a tax benefit of approximately $7.0 million that was recorded from the loss on investment of a subsidiary.

2016 Acquisitions

Conchord Limited

On November 10, 2016, the Company acquired all of the outstanding shares of Conchord Limited, which operates Asquith Day Nurseries & Pre-Schools (“Asquith”), a group of 90 child care centers and programs throughout the United Kingdom, for cash consideration of $206.1 million, which was accounted for as a business combination. The purchase price was financed with available cash on hand, funds available under the Company’s revolving credit facility, and term loans. The Company incurred transaction costs of approximately $1.4 million for this transaction, which were included in selling, general and administrative expenses in 2016.

The purchase price for this acquisition has been allocated based on the fair value of the acquired assets and assumed liabilities at the date of acquisition as follows (in thousands):



	At acquisition date As reported December 31, 2016			Measurement period adjustments			At acquisition date As reported December 31, 2017
Cash	$	5,210		$	75		$	5,285
Prepaid expenses and other assets	5,700			(237		)	5,463
Fixed assets	96,868			(1,368		)	95,500
Intangible assets	10,540			1,860			12,400
Goodwill	122,714			(5,914		)	116,800
Total assets acquired	241,032			(5,584		)	235,448
Accounts payable and accrued expenses	(18,696		)	1,569			(17,127		)
Deferred revenue and parent deposits	(5,394		)	1,026			(4,368		)
Deferred tax liabilities	(7,793		)	2,993			(4,800		)
Other long-term liabilities	(3,048		)	(4		)	(3,052		)
Total liabilities assumed	(34,931		)	5,584			(29,347		)
Purchase price	$	206,101		$	—		$	206,101

The Company acquired fixed assets of $95.5 million, including 39 properties. The Company recorded goodwill of $116.8 million, which will not be deductible for tax purposes. Goodwill related to this acquisition is reported within the full service center-based child care segment. Intangible assets consist of $9.9 million of customer relationships that will be amortized over five years and $2.5 million of trademarks that will be amortized over six years.

The operating results for Asquith are included in the consolidated results of operations from the date of acquisition. The following table presents consolidated pro forma information as if the acquisition of Asquith had occurred on January 1, 2015 (in thousands):



	Pro forma (Unaudited)
	Years ended December 31,
	2016		2015
Revenue	$	1,649,665	$	1,548,560
Net income	$	96,033	$	89,404

The unaudited pro forma results reflect certain adjustments related to the acquisition, such as increased amortization expense related to the acquired intangible assets as well as financing costs. The pro forma results for the year ended December 31, 2015 include nonrecurring transaction costs that were incurred by the Company and the acquired business in relation to the acquisition, totaling $4.3 million, which were excluded from the pro forma results for the year ended December 31, 2016.

Asquith contributed total revenue of $11.3 million in the year ended December 31, 2016. The Company has determined that the presentation of net income, from the date of acquisition, is impracticable due to the integration of the operations upon acquisition.

Other 2016 Acquisitions

During the year ended December 31, 2016, the Company also acquired four centers in the United States and eight centers in the United Kingdom in four separate business acquisitions, which were each accounted for as business combinations. The centers were acquired for cash consideration of $18.1 million and contingent consideration of $1.1 million. The Company recorded goodwill of $17.1 million related to the full service center-based child care segment, a portion of which will be deductible for tax purposes. In addition, the Company recorded intangible assets of $3.3 million, consisting primarily of customer relationships that will be amortized over five years, as well as a working capital deficit of $1.8 million, including cash of $0.3 million, in relation to these acquisitions.

During the year ended December 31, 2016, the Company acquired all of the outstanding shares of a provider of back-up care in the United States, which was accounted for as a business combination. The business was acquired for cash consideration of $10.4 million and contingent consideration of $3.8 million. The Company recorded goodwill of $9.2 million related to the back-up care segment, which will not be deductible for tax purposes. In addition, the Company recorded intangible assets of $4.9 million, consisting primarily of the provider network that will be amortized over five years, as well a technology of $2.6 million, and working capital of $0.4 million, including cash of $0.3 million, in relation to this acquisition.

2015 Acquisitions

On May 19, 2015, the Company acquired Hildebrandt Learning Centers, LLC, an operator of 40 centers in the United States, for cash consideration of $19.2 million and contingent consideration of $0.5 million, which was accounted for as a business combination. The Company recorded goodwill of $13.2 million related to the full service center-based child care segment, which will be deductible for tax purposes, and intangible assets of $5.7 million, consisting of customer relationships that will be amortized over 12 years. The Company also acquired working capital of $0.3 million, including cash of $1.5 million, and fixed assets of $0.5 million.

On July 15, 2015, the Company acquired Active Learning Childcare Limited, an operator of nine centers in the United Kingdom, for cash consideration of $42.2 million, which was accounted for as a business combination. The Company recorded goodwill of $31.1 million related to the full service center-based child care segment, which will not be deductible for tax purposes, and intangible assets of $3.8 million, consisting primarily of customer relationships that will be amortized over five years. The Company also acquired a working capital deficit of $1.8 million, including cash of $2.8 million, fixed assets of $9.8 million, and deferred tax liabilities of $0.7 million.

Our acquisitions of Hildebrandt Learning Centers, LLC and Active Learning Childcare Limited contributed approximately $29.6 million of incremental revenue in the year ended December 31, 2015.

During the year ended December 31, 2015, the Company also acquired four additional centers in the United States and four additional centers in the United Kingdom, in six separate business acquisitions which were each accounted for as business combinations. The centers were acquired for cash consideration of $20.5 million and contingent consideration of $0.8 million, net of cash acquired of $0.3 million. Contingent consideration of $0.8 million was paid during the year ended December 31, 2016 in relation to these acquisitions. The company recorded goodwill of $18.5 million related to the full service center-based child care segment, a portion of which will be deductible for tax purposes. Intangible assets of $2.7 million, consisting primarily of customer relationships that will be amortized over five years, were also recorded in relation to these acquisitions.